Venture Capital Clean Technology

Venture Capital Investment Rises from Clean Technology

Venture capital has rebounded according to reports on the second quarter of 2009, after two dismal quarters for the industry. Clean technology investments gave the much-needed boost to venture capital with a 12% rise from clean tech in Q1 2009. Venture investments in clean tech added up to $1.2 billion spread across 94 companies.

Although this is great news for the struggling industry, no one is popping the champagne bottles just yet. This quarter is an improvement on the last two, but venture capital investment levels are still 44% lower than last year’s second quarter.

Brian Fan, senior researcher for Cleantech concluded, “We are seeing initial signs of recovery in other clean-tech asset classes, including recent activity in solar-tax equity, increased M&A levels, as well as billions in government stimulus that are being allocated globally to the clean-tech sector over the next several quarters.” Fan added, “”Additionally, new climate and energy legislation from governments worldwide and the upcoming Copenhagen climate negotiations continue to be strong drivers of investment and innovation.”

BusinessGreen has more:

The transport-related technologies attracted the highest level of VC backing during the quarter with $236m invested in vehicle technology, $206m in biofuel firms and $165m going to battery companies.

Meanwhile, the suspicion that investment in the solar sector has overheated was reinforced when the sector recorded its lowest quarterly level of VC backing in three years with just $114m invested.

However, Scott Smith, US leader of Deloitte’s clean-tech practice, downplayed any fears over the health of the solar sector, noting that any drop in VC investment had been at least partly compensated by increased investment from utility firms.

“Solar thermal was the leading energy source procured through power purchase agreements in the first half of 2009,” he said. “New investment tax credits are playing a major role in making new solar thermal, solar PV, and wind projects more economically viable for utilities, which are bringing their access to capital to the sector.”

The report also showed that the consolidation trend across the clean-tech sector is accelerating with 138 M&A deals noted in Q2.